Chancellor Rachel Reeves delivered her Spring Statement on 26 March 2025. She has introduced updates on the UK’s fiscal and economic landscape. Unlike previous years with two major Budgets, the government has now shifted to a single annual fiscal event. The next major policy changes are expected to be announced in autumn.
The Spring Statement is a progress update on the government’s “Plan for Change,” It emphasizes economic growth, public service efficiency, and national security.
Here are some key tax highlights:
- Continued efforts to combat tax evasion, with a goal to reduce fraud cases by 20%.
- No changes to income tax rates or National Insurance for workers, but employer National Insurance contributions may increase, potentially affecting wages.
- The number of taxpayers will rise due to frozen tax thresholds until April 2028.
- Expected income tax revenue surge from £310 billion (2024-25) to £378.5 billion (2027-28).
Government Initiatives and Spending Plans
- Defense and Security: Commitment to increase NATO-qualifying defense spending to 2.5% of GDP by 2027, with an extra £2.2 billion allocated to the Ministry of Defence.
- Public Services & Welfare: Reforms projected to save £4.8 billion by 2029-30, focusing on sustainability and efficiency.
- Infrastructure & Workforce Development:
- £3.25 billion transformation fund to drive efficiency and enhance public services.
- £625 million investment in construction sector skills training, aiming to upskill 60,000 workers.
- Government Efficiency & Housing:
- Plans to cut running costs by 15%, reducing civil service jobs through voluntary exits, potentially affecting 10,000 employees.
- Target to build 1.5 million new homes during this Parliament.
With the UK economy projected to grow and fiscal rules being met two years ahead of schedule, the government remains focused on strengthening public finances. Expect further policy developments in the autumn.
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Reviewed by:
Junaid Usman
Apart from being a partner at Legend Fusions, Junaid is an expert on Business Tax including business management advisory services which has proven in the growth of company. He is a promising advisor with an ideology; “Any business success depends on the level of objectivity it maintains.”